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Bailout tests how much the American public will tolerate theft

by Sean Olen­der
San Fran­cis­co Chron­i­cle [1]

Trea­sury Sec­re­tary Paulson’s edict to cre­ate a $700 bil­lion fund to buy worth­less mort­gage secu­ri­ties from agi­tat­ed wealthy bond investors is noth­ing short of a final step on the path to the end of the repub­lic. The sec­re­tary claims he can only be effec­tive if his deci­sions are beyond judi­cial review.

Our gov­ern­ment and its own­ers appear to be test­ing how much the Amer­i­can pub­lic will tol­er­ate. A few years ago, no one could have imag­ined that the silent major­i­ty would qui­et­ly accept thefts of this mag­ni­tude from a gov­ern­ment that stopped tiny pay­ments to sin­gle moth­ers with poor chil­dren in the name of wel­fare reform because the pro­gram’s $10 bil­lion cost was break­ing the fed­er­al bud­get.

This isn’t social­ism, it’s fas­cism.

If the pub­lic allows this theft, then it will sig­nal to pow­er­ful forces that they can essen­tial­ly do any­thing, because the Amer­i­can pub­lic has become so mushy-head­ed that it will stand up for noth­ing. When pow­er dis­cov­ers that those from whom it would exact pay­ment are pow­er­less, its vicious­ness increas­es infi­nite­ly.

Our politi­cians appear on tele­vi­sion and say, this is an emer­gency, so we have to do this now and talk about it lat­er. And then lat­er is too late.

It is not just a $700 bil­lion bailout, it is a $700 bil­lion fund that can have no more than $700 bil­lion in lia­bil­i­ties at any one time. Maybe Gold­man Sachs can sell mort­gage-backed secu­ri­ties to the fund at 80 cents on the dol­lar and then the fund will liq­ui­date the secu­ri­ties by sell­ing them back to Gold­man for 50 cents on the dol­lar. Then Gold­man can sell them back to the fund for 85 cents on the dol­lar. That would be a good busi­ness, espe­cial­ly if no court can review it.

Our ene­my has revealed itself, and it is our own gov­ern­ment. The con­cen­tra­tion of such out­ra­geous pow­er in gov­ern­ment — the pow­er to take the equiv­a­lent of half our annu­al fed­er­al bud­get and give it to anony­mous investors — is near­ly reach­ing the point at which it may not be revoked.

It is only nat­ur­al that we, dream­ing of the pos­si­bil­i­ty of our own rich­es, acqui­esced in some of these finan­cial schemes. Of that, we should not be ashamed. Many Amer­i­cans may now be think­ing, “But sup­pose some­day I am a wealthy bond investor worth $50 mil­lion?” But you are not a wealthy bond investor and the val­ue of your house and stock invest­ments is going to drop, regard­less of how much tax mon­ey the gov­ern­ment gives to wealthy bond investors. This bailout is essen­tial­ly the fed­er­al gov­ern­ment say­ing to cred­i­tors, “Because the Amer­i­can con­sumer appears to be refus­ing to pay his debts, we will buy your claims on the con­sumer, and exchange them for mon­ey cre­at­ed by issu­ing Trea­sury bills, which is our promise to extract that mon­ey from Amer­i­can con­sumers using our tax­a­tion author­i­ty.”

Some day our chil­dren will call on us to explain how our repub­lic was lost. I can­not imag­ine the shame of fac­ing a grown child to explain, “Fool­ish­ly, I thought I would get some of the mon­ey, too.”

Because the Amer­i­can pub­lic has not been intro­duced to meth­ods for con­trol­ling its gov­ern­ment for gen­er­a­tions for gen­er­a­tions, I will sug­gest one called a gen­er­al strike. This fun­da­men­tal demo­c­ra­t­ic pow­er is where every­one decides to send a mes­sage to the gov­ern­ment by not going to work, to school, shop­ping, nowhere.

At this point in our his­to­ry, very bad things are going to hap­pen regard­less of what we do. There is no gov­ern­ment action that can alle­vi­ate the dis­com­fort we must endure because of the wild spec­u­la­tion and reck­less bor­row­ing that ensued. What’s com­ing is inescapable. This is the crit­i­cal time when char­la­tans among us will promise they can save us from the inevitable if we only allow them the pow­er they need to save us. They are lying. It is time to earn our free­dom. It is time to remind the gov­ern­ment that we are Amer­i­cans and we have a his­to­ry of sub­ject­ing tyran­ni­cal gov­ern­ments to unpleas­ant con­se­quences.